Survey: More Refunds, Fewer Audits for Hispanics

Hispanics are less likely than non-Hispanics to say that they owe money to the Internal Revenue Service for 2005 (14 percent versus 22 percent) and they are more likely than non-Hispanics to report having received a refund for 2004 (73 percent versus 62 percent), according to poll results released by Hispanic market research firm Encuesta Inc.

The survey attempted to compare the views and experiences of more than 600 Hispanics and non-Hispanics on a variety of tax topics. A similar percentage of respondents from both groups said that they had already filed, or planned to file, a 2005 tax return.

Looking at tax return preparation, the survey found that Hispanics are more likely than non-Hispanics to seek assistance. Only 10 percent of Hispanics said that they have or will prepare their 2005 return themselves, compared to 26 percent of non-Hispanics. For 21 percent of Hispanics, an organization or agency that provides the service free of charge is preparing their federal tax return, compared to 11 percent of non-Hispanics.

Encuesta suggested that the poll reveals Hispanics may know less about tax rules than non-Hispanics. In addition to being more likely to go without their income until they receive a refund, Hispanics were less aware of six tax deductions tested, including charitable contributions and retirement savings. Among those aware of the tax deductions, however, similar proportions of both populations report taking them when filing for 2005. The one exception is work-related expenses, which Hispanics are significantly more likely to say they will claim (63 percent compared to 48 percent of non-Hispanics).

Only 12 percent of Hispanic respondents said they had been audited, while the percentage stood at 22 percent for non-Hispanics.

The nationwide survey also asked for opinions on options for reforming the federal tax system. The response rates of the two populations were notably different when it came to preference for a national sales tax instead of income tax. Half of the Hispanic respondents felt it would be better to keep income taxes, compared to 45 percent of non-Hispanics; and only 16 percent of Hispanics favored some sort of national sales tax, compared to 23 percent of non-Hispanics.

Encuesta conducted the poll by telephone from April 6-13, across a representative national sample of 321 Hispanic and 305 non-Hispanic adults.